Major Online Poker Sites Targeted in U.S.

On Friday, the U.S. Attorney’s Office for the Southern District of New York unveiled indictments against the founders of the three largest online poker companies operating in the U.S. and seized their websites.  The indictment names 11 defendants, including the founders of PokerStars, Full Tilt Poker, Absolute Poker, and five payment processors, and charges them on nine different counts.

The charges include conspiracy to violate the Unlawful Internet Gambling Enforcement Act (UIGEA), violation of the UIGEA, bank fraud, money laundering, and illegal gambling.

PokerStars and Full Tilt Poker have responded by shutting down their poker operations to U.S.-based customers.  The FBI has seized the primary domains of PokerStars, Full Tilt Poker, Absolute Poker, and UB.com. The sites have since relocated to .eu and .co.uk domains, as the seizures do not affect play outside of the United States.

In addition to the criminal charges, the U.S. Department of Justice filed civil charges against the sites seeking approximately $3 billion in damages.  The FBI has also frozen 76 bank accounts from the online poker sites.  The 11 named defendants are Ray Bitar (age 39), Scott Tom (31), Brent Beckley (31), Bradlen Franzen (41), Ira Rubin (52), Chad Elie (31), John Campos (57), Nelson Burtnick (40), Ryan Lang (36), Isai Scheinberg (64), and Paul Tate (age not listed).

Said Manhattan U.S. Attorney Preet Bharara in the indictment, “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits.  Moreover, as we allege, in their seal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud.  Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”

The indictment outlays how the online poker sites allegedly partnered with third party payment processors that would provide alternate codes to avoid making the transactions appear as gambling to U.S. banks.  The indictment also claims that certain deals were constructed with small U.S. banks promising shares of ownership to individuals who assisted with processing hundreds of millions of dollars in deposits and providing the online poker companies methods of circumventing the UIGEA.

“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck,” says Janice Fedarcyk, FBI Assistant Director-in-Charge. “They lied to banks about the nature of their business.  Then some of the defendants found banks willing to flout the law for a fee.  The defendants bet the house that they could continue their scheme and lost.”

Late Friday night, Full Tilt Poker CEO Ray Bitar, who is one of the 11 defendants named in the indictment, addressed customers on Full Tilt, saying, “I am surprised and disappointed by the government’s decision to bring these charges.  I look forward to Mr. Burtnick and my exoneration.”

John Pappas, Executive Director of the Poker Players Alliance (PPA), released a firm statement regarding the matter: “Millions of Americans across the country today are outraged over the U.S. Department of Justice’s clear attack on internet poker.  While the government’s focus may be on the companies that operate these games, this is plain and simple a declaration of war on poker players and poker player’s freedoms.”

Pappas continued, “Let me be clear, online poker is not a crime and the honest poker players across the country will not stand to be restricted from one of America’s greatest pastimes.  On behalf of over one million members, the PPA is working hard to protect the interests of our players and is committed to U.S. citizens’ right to play online poker.”

While it is not immediately clear what will happen to player’s online balances, the sites have been adamant that their account balances are safe and will be returned to players as soon as they can.